Mike Shatzkin is back from the London Book Fair and reports that publishers everywhere are upset about the Department of Justice price-fixing suit against Apple and the Big Defendants.

Here’s Mike’s latest take on the suit:

We understand that an amendment to the Tunney Act obliges the DoJ to take note and report to the court any opinions expressed in writing by the citizenry about a settlement that takes place in a case still being litigated. Cader notes that the law has usually been used to expand a judge’s ability to exercise oversight when the court believes DoJ hasn’t been tough enough. In this case, we’ll be asking them to pare back a settlement, which is apparently a less common use of the law. But the law allows us 60 days from the settlement to get those letters in and it is what we in the community can do to help fight this battle.

As I wrote in my summary of the impact of this settlement, it is one where Amazon and the cost-conscious ebook consumer win, but everybody else (and that means authors, publishers, retailers, and the public that wants good books, as I explained on NPR) lose. The low-price side of this is easy to understand. The publishing business side isn’t. (If this were a GOP DoJ, I’ll admit that I would have inserted a snide remark here about what this shows about their IQ.)

One point to note here, which didn’t occur to me at first, is that the three settling publishers are about to game the two fighting publishers (and, perhaps, Random House) the same way Random House gamed them when they stayed out of agency at first. Whether or not they stick with agency, they are now enabling discounting, so they might get the same benefit of the retailer discounting their goods while they retain their revenue that Random House got for the first year of agency.

In other words, more weight on the shoulders of the two companies, Macmillan and Penguin, who are carrying the fight for the whole industry. And that means more reason for the rest of us to try to help.

I am working on my letter to DoJ now, and I’ll publish it in a future post. I hope all my readers who understand what’s at stake here will also write to Justice. Address your letters to

Blowing off “cost-conscious ebook consumers” is thoughtless and insensitive, particularly given how restrictive Big Publishing/Big Defendants are with ebooks in libraries.

Make no mistake about the motivation of Apple and the Big Five. They wanted to harm Amazon and prevent it from using its own judgment to set prices the way your local book store does.

The five publishers illegally colluded in a private room at Picholene in Manhattan (Did they order from the prix fixe menu?) so they could take hundreds of millions of dollars from American book purchasers by requiring Amazon and everybody else to sell books for higher prices than the retailers wanted to charge. Steve Jobs said, “The customer pays a little more,” but that’s incorrect. The customer paid a lot more.

This is not a victimless crime. The Price Fix Six stole money from people who buy books.

PG says you ought to write a letter to the Department of Justice yourself.

17 Comments to “Dinosaurs vs. Mammals”

“Amazon benefits because they can drive down prices and drive their ebook competitors from the field. Fledgling authors will lose because they’ll lose the price differential that makes them discoverable. Experienced authors will lose because they’ll lose the publishers that pay substantial advances (and provoke Amazon to compete on that front.) The authors that now win through disintermediation will lose because Amazon won’t have to pay them 70% anymore in the future when there aren’t other alternatives. The competitive retailers will lose because they won’t be here anymore.

And the consumer that wanted the value a publisher adds, including financing books like the Steve Jobs bio (the most convenient recent example of a high-cost non-fiction book that requires a substantial advance to get written) that won’t be produced, will lose things they won’t even know could have existed!”

Literally every point within these paragraphs is either wrong, misleading or based on a paranoid “Amazon will completely change its philosophy once they control the universe!!!” future.

That’s the first time I’ve ever read his blog, and I’m pretty sure it’s the last.

Yeah, if you want to see what happens when a really smart guy puts on the tradpub blinders, Shatzkin’s your read.

I love the unspoken-but-apparently-unshakeable assumption that “competition for Amazon” = Barnes & Noble. Period. There is no other competition, there will be no other competition, there has never been other competition, and there can never be other competition. Now you know.

It amazes me how they. One out and just flat out lie. It’s like they’re politicians or something. Joe Konrath put it in a great light on his blog. Lower prices will not hurt the indie, but help them. When people have more room in their book budget, they’ll but the big name, yes, but with that extra money, they’ll scoop up our books as well. It’s how shopping works and I totally agree. If I’m planning to spend $10.00 on a book, and see the one I want for $5.00, I’m getting a second book with my extra five bucks. I might even spend a little extra since I’m getting a good deal. Either this guy is a fool, or he thinks we all are….

Blowing off ”cost-conscious ebook consumers” is thoughtless and insensitive

It’s also bad business. The fact that someone has financial concerns or restrictions that keep them out of your market today does not mean that they will not be in your market tomorrow. But if you treat them like garbage today, you can bet they will remember that tomorrow.

I agree with you, PG, on this one. I like Shatzkin’s work a lot. I don’t always agree with him (and to be fair, I don’t always agree with anybody) but his stuff is always well researched and smartly presented. When I read this piece this morning, though, it just left me shaking my head. It’s like he’s openly advocating that the publishers suffer no consequences for price fixing, which is a horrible precedent to set. With all the concern about what Amazon might do, what do these folks think might happen if this gang of publishers effectively gets away with collusion and price fixing? I’m far more concerned about giving these guys a green light to collude to squash competition than anything Amazon might do.

Besides, it looks to me like the ultimate result of this may well give us some combination of Agency, Modified Agency and Wholesale pricing, possibly sans any Most Favored clauses. That’s an array of pricing schemes across an array of retailers. I don’t see how that hurts anyone producing and selling books, large or small. It certainly doesn’t benefit the giants in the same way locked-in, fixed price Agency did, but I would argue that system hurt everyone but the biggest players on the print side of the ledger, anyway. Getting rid of that certainly isn’t going to be worse than the long term results of Fixed Agency would have been.

Shatzkin’s falling into a trap I see too often these days, in that assuming what’s bad for the largest traditional players must be bad for the industry as a whole. Right now, from my point of view, these price fixing publishers are the one’s most responsible for doing harm to the industry.

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I really don’t know enough about all of this to state who I believe or support in this.

All that I will say is that Amazon had a huge monopoly on e-book sales before Apple came along and offered the agency model, and if Amazon is allowed to sell e-books at a loss (Why isn’t this considered predatory pricing?) then it stands to reason that they will gain a monopoly position again.

I don’t care what company it is, nor what segment they are in competition is the life blood of good consumer service. If Amazon is allowed to establish themselves as the only effective source for e-books there will be a degradation of service quality. That might mean price will rise (no company stays in business by selling their product at a loss) that might mean that what authors earn will decrease (see above), that might mean that they start acting as moral gatekeepers, that might mean that they simply start acting just like the existing big publishers (they all started out as small underdogs at one pint).

I cannot predict the future, but I will say that I do believe that there is nothing so special about Amazon that makes me believe that they will not follow the same path that every company does when competition is eliminated. So keep that in mind, because I wouldn’t be surprised to see the same people fighting for Amazon here today decrying them in the not to distant future, when they follow the same well worn path that so many have trod before them.